Foreign currency trading is highly volatile with frequent often dizzying price swings. Volatile markets provide more opportunities to execute excellent and lucrative trades.

One of many reasons why foreign currency trading has remained attractive among retail Forex traders, both old and new, is it is highly volatile with frequent often dizzying price swings. Volatile markets provide more opportunities to execute excellent and lucrative trades as long as one can identify and pick the right directional changes in prices as they happen when they happen.

The idea is to catch a changing trend as it is just rearing its nasty head and ride out the new trend for as long as it lasts in the other direction. In short, you will be practically "swinging" from one direction to the other as the trend shifts from an upswing to a downswing or from a downswing to an upswing.

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Some traders have been trying time and again to develop such a trading strategy which they hope would be able to take advantage of the price swings resulting from market volatility. They wanted one that can deliver consistent and substantial returns. And, for obvious reasons, they called these strategies collectively as 'swing trading'. Different swing trading strategies started to crop but none of them delivered the desired results.

The success of any swing trading strategy actually hinges on having a solid and tested method for picking directional changes in the prices. Unfortunately, this is the proverbial 'Holy Grail' of foreign currency trading which for decades now has remained elusive. Everyone has been searching for it albeit without success. Traders could only wish they have such a tool or strategy that can predict shifts in prices before they happen and with a great degree of accuracy. Sadly, such does not exist – not just as yet though. And, in my humble opinion, they won't find it ever simply because they have been looking for it in the wrong direction.

For one thing, most if not all of the swing trading strategies that have been published so far use one or more of the standard technical analysis tools that have been developed so far - either as a stand-alone tool or in combination with each other - to predict future price directions. Everyone knows that all these technical studies and tools are merely modeled out of or calculated from previous price movements to forecast future price direction – a methodology that has been proven to be ineffective by the huge losses incurred by traders who have been using these strategies.

People tend to forget the fact that the price of any commodity or security is but a reflection of the collective sentiment currently shared by the majority of the players trading in the market at that particular time. For example, if their underlying sentiment about a commodity or security is bullish, then they go on an overwhelming buying spree which pushes the prices up. Conversely, if they are bearish, then they go on a selling spree which pushes the prices down. It is the shift in the sentiment of the majority that we need to be sensitive to since they indicate a possible trend change in the near term.

The problem is - can we measure the underlying sentiment of the majority of the market players at any given time? The straightforward answer is no. However, we can be immediately alerted to these sentiment shifts with the use of the Japanese Candlestick Charts formations. With the candlesticks, you can easily discern the strength or weakness of every price move from the length, breadth, and color of every candlestick. They will even tell you when to stay out and remain on the sideline. Amazing, indeed and all you need to do is spend some time to be familiar with candlestick chart formations and the message each of them conveys to you.

Now, here is the best tip for you. If you use the candlesticks along with resistance and support lines, you will never get lost - and never guess your way around. Simply pay attention to sentiment shifts that are reflected by the candlesticks formations that occur or coincide with significant support or resistance lines – particularly those that pop up –in the level of historical highs or lows. With a great degree of accuracy, the market is likely to either 'hiccup' or take a big leap forward from that point.

The bottom line is there is no better tool to use to formulate profitable swing trade strategy except with candlesticks along with resistance and support lines.